Buffett May Buy Stake in Bear Stearns
Thursday, September 27, 2007
Bear Stearns shares rose 7.7 percent yesterday on speculation that investors including Warren E. Buffett may buy all or part of the company.
Bear Stearns closed at $123, up $8.76, after the New York Times said Buffett and other investors were negotiating to buy as much as 20 percent of the fifth-largest U.S. investment bank.
The negotiations with Buffett, chief executive of Berkshire Hathaway and a director of The Washington Post Co., and the others were "serious," the Times said, citing unidentified people familiar with the matter.
Berkshire spokeswoman Jackie Wilson said nobody was available to comment. Bear Stearns spokesman Russell Sherman declined to comment.
The stock advanced earlier in the day on speculation "that a Chinese bank is looking to take a significant stake," said Marc Weinberger, head trader at W. Quillen Securities in New York.
Bear Stearns held negotiations in 2006 about selling a stake to China Construction Bank, that country's second-biggest bank, the Wall Street Journal reported this month. The talks broke down when China Construction's president left the bank.
Bear Stearns stock has fallen 24 percent this year on concern that losses in mortgage-backed bonds would slow its profit growth.
In June, two hedge funds managed by Bear Stearns collapsed because of bad bets on subprime mortgages. The losses helped trigger a month-long rout in credit and stock markets worldwide.
Some investors have bought Bear Stearns shares since then in anticipation of a rebound. Currency trader Joseph Lewis became the firm's largest holder, paying $860.4 million for a 7 percent stake, according to a Sept. 10 filing with the Securities and Exchange Commission.